Monday, 1 February 2010

Hank Paulson On the Brink

A while back I criticized the book by a financial correspondent of the New York Times about the financial crisis as gossipy, trashy and not at all informative. Then, in today’s Wall Street Journal, I read an excerpt from Hank Paulson’s new book, On the Brink.

There is no doubt: on the evidence of his writing, the man is a cretin. In the half-page excerpt, he describes nonsensical and random details that would alarm a mad painter: leaving the Waldorf=Astoria Hotel early in the morning, speeding down a deserted Park Ave, getting to the Fed before 7am, riding the elevator to the 13th floor, wondering whether or not to take sleeping pills that were given to him in Washington D.C. (Being a Christian Scientist, he decides against it).

These details might or might not have been added for drama. But these are the things that he remembers precisely because he does not understand the crisis that is unfolding around him. He knows he is grossly out of his depth, so he does not dare/bother to pause, think, and contemplate. He merely moves – jumps really, like a headless chicken – from one scene of the crisis to the next. Naturally, then, after two days he is exhausted:

All weekend I’d been wearing my crisis armor, but now I felt my guard slipping.

And what does a former CEO of Goldman Sachs, now the Treasury secretary, do under these conditions?

I knew I had to call my wife, but I didn't want to do it from the landline in my office because other people were there.

”What if the system collapses?” I asked her. “Everybody is looking to me, and I don't have the answer. I am really scared.” I asked her to pray for me, and for the country, and to help me cope with this sudden onslaught of fear.

His wife, just back from the church, immediately quotes from the Second Book of Timothy, verse 1.7 which says that God “hath not given us the spirit of fear but ... of a sound mind”.

The objective conditions produced by this crisis enabled me to sharpen the Theory of Speculative Capital. The unintended humor produced by the various players in the crisis provided much needed comic relief after long hours of work. How many times, in the middle of the night, reading a seemingly serious piece on the crisis, have I burst out laughing!

Wearing one down and energizing him: that, too, I suppose, is a dialectical characteristic of the crisis.